Inflation slips to 3.45%

TNN|

Dec 29, 2007, 03.08 AM IST

0Comments

NEW DELHI: Wholesale price-based inflation slipped for the third week, ending December 15, to 3.45% from 3.65% in the previous week on account of lower prices of food, vegetables and textile products. Inflation was ruling at 5.73% during the corresponding period last year. The figure is well below the central bank's target of 5%.

Meanwhile, the provisional figure for the week ended October 20 was revised to 3.11%. The wholesale price index stood at 215.6 points in the week, an official release said on Friday.

Although inflation has remained range-bound in a comfortable zone, economists expect the central bank to leave interest rates untouched at its monetary policy next month. HDFC Bank's chief economist Abheek Barua said consumers are unlikely to get any relief in near future by way of softening interest rates due to high inflationary expectations. Going forward, oil and food prices remain major concerns. If there is a revision in oil prices, it can push inflation beyond 4%, he said.

Experts cautioned against building up of inflationary pressures in edible goods, crude oil and agri commodities. "Higher crude oil price is a matter of concern. The practice of keeping fuel prices artificially low would swell up the government's oil subsidy. If crude oil price remains bullish, it would be a prudent move to pass on some burden to consumers," ICRIER head Rajiv Kumar said.

Most food prices fell during the week under review. Prices of fruits and vegetables went down by 2%, while textile prices fell by 5.9% and cotton yarn by 7.7%. However, prices of poultry chicken went up by 2% and urad, condiments and spices went up by 1% each. The prices of beverages and tobacco products rose by 3.3% and imported edible oil and groundnut oil prices increased by 1%.

Prices of manufactured products, which have a weight of 53.75% in the price index, marginally declined by 0.2%. Prices of fuel, power, light and lubricants remained steady.